When President Obama took office, America’s automobile
industry was on the brink of collapse. The financial crisis had nearly frozen
access to credit for vehicle loans and sales had plunged by 40 percent. Faced
with that sober reality, the Obama Administration moved quickly to protect the
broader economy by stabilizing the industry. These actions saved more than one
million American jobs, according to independent estimates.
Last week, I travelled with the President to Ford’s Kansas
City assembly plant where
he reflected on the revival of the automobile industry, which is now profitable
and creating jobs at the fastest pace in 15 years. In fact, since June 2009,
when GM and Chrysler emerged from bankruptcy, over 340,000 jobs have been created.
Treasury exited its investment in Chrysler in 2011, recovering
90 percent of the taxpayer funds six years ahead of schedule, and expects to
exit from GM by the first quarter of 2014, subject to market conditions.
Treasury announced last week that it has recouped more than 70% of the initial
investment and reduced the taxpayer’s stake of GM stock from over 60% at the
peak to only 7.3%. And earlier today,
Treasury announced that it will continue its sales of GM common stock by
launching a third pre-defined written trading plan. Finally, Ally, formerly known
as GMAC, recently announced that it will repay taxpayers an additional $6
billion, subject to Federal Reserve approval of a transaction announced in
While the auto industry rescue may end up as a net cost to
the government, the cost of a disorderly liquidation to the families and
businesses across the country that rely on the auto industry would have been
far higher. Said Alan Mullaly, CEO of Ford Motor Company:
GM and Chrysler would've gone into free-fall they could've taken the entire
supply base into free-fall also, and taken the U.S. from a recession into a
depression. That's why we testified on behalf of our competitors even though we
clearly did not need precious taxpayer money."
While there is still more to work to be done, the decision
to rescue the American auto industry helped the economy recover from the financial
crisis and enabled the auto industry to come roaring back.
Tim Massad is the
Assistant Secretary for Financial Stability at the U.S. Department of the